THE turmoil caused by Covid-19 has changed the government’s Jersey Business organisation almost beyond all recognition.
This time last year it was handing out valuable advice on a one-to-one basis to businessmen worried about Customs regulations or how to improve their productivity. It still does that today, but it has also taken on a much wider role of helping to save businesses from collapse and making sure government understands the needs of a battered economy.
This prompted the recent restructuring and the creation of a new industry development team helping existing businesses to become more efficient and able to compete internationally. A six-strong advisory team under the leadership of Kenny Sillars will help to expand and deepen the advice and assistance they can give local business and tighten the focus on those most impacted by the pandemic.
The man at the centre of these efforts, chief executive Graeme Smith, appears to have taken the crisis in his stride but must have felt overwhelmed at times by the impact on local businesses and the huge increase in Jersey Business’s workload.
They had already grown from simply offering advice to becoming the voice linking business and government, which was just what was needed when Covid-19 struck.
‘It was quite clear that once the borders were effectively going to be shut and businesses were told to close and work from home, if they could, that there was going to be a huge challenge in terms of giving businesses advice about Covid matters,’ Mr Smith said. This was made more difficult because no one at the time really knew what was going on, how the pandemic would progress, or how much of an economic impact it would have.
‘There were a lot of questions about what might happen and what support businesses would get, and so we started to help government in terms of the payroll support scheme. We kind of pivoted from a general advisory role to giving specific guidance through our website, and through our conversations and our relationships with businesses.’
The chief executive likened the process to going through a family bereavement, where the initial response is shock, which sometimes develops into anger and frustration, and not knowing what to do.
‘So we played a role with government to try to corral the right sort of information and the right sort of challenges to help government develop the policy, and payroll support was a critical part of that,’ he added. ‘I have to give huge credit to the officers within government, because if you look at the various things that had to be done, each one of those would have normally taken 18 months. It shows how quickly they can move and it’s often true that sometimes a burning bridge creates innovation. Yes, you can make some mistakes but you learn alone and learn quickly. So a big part of what we did there was trying to get good communication out to businesses which were going through these emotional stages. The first phase tends to be short, the second phase is frustration and anger, the third phase we are probably into now as the planning begins and people try to understand how they are going to survive as a business.’
This next stage for Mr Smith’s organisation will therefore be to help remodel businesses to fit the new norm, although it is not clear yet what that will be.
Whatever support Jersey Business offers will need to be backed by superb communication, which was also a crucial factor during the lockdown. That saw a massive increase in enquiries received by the organisation, with 50,000 separate users logging onto their website over the period, 49,000 of whom were new contacts. It is estimated that everyone visited the site at least twice, and most of them more often. There was also a huge number of phone calls, while at the same time Jersey Business’s staff were also busy helping government develop the payroll support scheme and other measures.
‘We were never the decision makers,’ Mr Smith said. ‘What we were trying to do was help government balance what matters for businesses and the different sectors, so that the first payroll scheme was very focused on hospitality, for example.’
That was quickly widened when it soon became clear that most of the economy had to be locked down. Rules needed to be carefully drawn up for the taxpayer-funded support schemes, and all of this had to be achieved very quickly, as few businesses in the Island had six months cash reserves and were now facing little or no revenue.
‘Government didn’t have any experience of this kind of thing, and they were trying to find their feet, like everyone else. But there was no reluctance on their part and I actually think they were phenomenal,’ Mr Smith said, adding that there had inevitably been some ‘challenging discussions’ in the process.
Other emergency measures, such as loans, would have taken longer to put in place, whereas payroll support was immediate and kept people in jobs and created a degree of confidence in the business community.
The later loan schemes also had a role to play, but it was difficult to predict the take-up. The banks, which were better capitalised than in previous recessions, were more amenable and supportive, and loans may now be a more important tool in the stimulus phase of the pandemic, Mr Smith said.
So far, there have been no massive business failures, which tends to prove the effectiveness of government support. But now Jersey Business faces an equally demanding challenge – rebuilding companies over a range of different sectors where reserves have been eaten into and where shareholder support differs.
Some organisations will be looking forward to the next three months with some confidence and the construction industry is already very active, but Mr Smith expects some failures where certain business models no longer fit the new circumstances as behaviour changes.
Mr Smith said: ‘Our role will be to act as an honest broker or a sounding board to go through what the future looks like as far as you can predict it, and how changes can be made to business models.’
This will have to be done sector by sector, with the smaller businesses needing more help than the big corporates, and because assistance will need to be more targeted, it will also be more complex for the organisation’s advisers.
What is clear to Mr Smith, however, is that the government will have to play a key role.
‘I’m a big fan of the private sector, and if it can deliver, then that’s the best way,’ he said. ‘But in certain situations there needs to be some level of government intervention. The reality is there is a partial market failure here, where SMEs in particular will need help, and that’s the area where we’re developing our expertise.’
This job of helping to transition from one type of economy to another will be complicated and no one yet knows what the new economy will be like. The example of the pandemic, however, has given Mr Smith confidence that the Island can move quickly.
The crisis has helped by creating the burning bridge which will act as a catalyst and foster entrepreneurship and innovation, which has been rather lacking in Jersey’s relatively benign economy.
Jersey Business, which has a very successful business improvement programme, for example, will be there to help, Mr Smith said.